Wrestling with smoke in Hong Kong

Hong Kong is a city in a hurry. Below the towers of concrete, stone and glass lining the picturesque Victoria Harbour the frenzied energy of the 7 million locals drives a huge money machine.

This is where the West meets the East and so it’s the perfect launching pad for an Australian business into the opaque powerhouse of China.

The opportunities can seem limitless but, in reality, the rewards are fleeting and the pitfalls great. The high-stakes gamble to tackle the Chinese market through Hong Kong is not for the fainthearted and capturing a piece of the action can be like wrestling with smoke, Australians on the ground say.

“The way the Chinese think is so completely different. They play hardball."

Hutchings is travelling with an Australian delegation for the second year to the Asian Financial Forum, which was held in Hong Kong on January 16-17. He is managing director of APIR Systems, which provides identification and coding services to the wealth management industry.

Last year, it opened an office in Hong Kong, where money is pouring out of China from wealthy investors trying to shift it away from the prying Chinese government.

The mainland administration entrusts Hong Kong to push Chinese currency around the globe and signed agreements to effectively make Hong Kong its trading face to the world.

Related Quotes

Company Profile

But Hutchings says APIR’s biggest client, with whom it is already doing big business, is yet to provide a formally signed contract.

He says the energy in business dealings can be misleading.

“It’s all very frantic but slow. It is double the time frames because no one ever agrees," he says.

“They protect their boss and they won’t do anything which may embarrass themselves. The Chinese can turn on the hospitality. Have you ever walked into a building for a meeting with an 80-inch television screen saying ‘Welcome Andy Hutchings’? But it is all meaningless. It is all arm’s-length stuff.

“The best advice I ever got was to be really careful not to stay here thinking you have a business, but go broke. This place sucks you in because it is always just around the corner."

He offers the same advice as many of the other 80,000 Australians working in Hong Kong. Don’t come in all guns blazing trying to capitalise on the growth of Asia but then disappear overnight.

“I’ve seen other people come in here during the time I’ve been here and crash and burn because they just want to make a sale. The Chinese want to know you are going to be here for a long time."

Having a presence in Hong Kong is crucial, he and others agree.

“They want to meet the organ grinder, not the monkey," Hutchings says.

Part of the Asian Financial Forum included a speed-dating service where organisers attempted to match businesses with potential investors. In a city where networking seems like the national sport, the approach was scattergun, to say the least.

“I spoke to one Australian who said they brought more than 1000 business cards and they will all be gone by this afternoon," says Hutchings.

“In Australia, you and I will meet, have a conversation and then hand over a business card, but there is a sense of rapport. The way these guys do it is, ‘I’m in a room with 2000 people, how many do I reckon I can get at?’, and then take out that many cards and start handing them out.

“Then when the conference is over, they get home, line up all the cards and say, ‘He doesn’t look like he’s interesting . . . him neither.’ "

To Australians, the approach may seem crude, but Hutchings says the Chinese are keenly aware they are but “one of 1.4 billion people [in China] and have to make their way in the world".

National networking clubs are also big in Hong Kong and Australia’s is the second-biggest behind the US.

AustCham is Australia’s official networking group and at a drinks function on a rooftop overlooking the junks and ferries on the harbour on Tuesday night, many attendees are from other parts of the world, looking to launch their business in Hong Kong and make quick connections.

“Australians really don’t care where you come from, they are more interested in what you are going to do, what you are energised about and whether you are able to talk business and hold a beer at the same time," says Australian Chamber of Commerce Hong Kong and Macau chief executive Kirsty Boazman.

The senior commissioner for the Australian government in Hong Kong, Phil Ingram, says it is niche businesses such as Hutchings’s that have been most successful because of the high Australian dollar.

“Most of the Australian success stories here, to be honest, are not directly in financial services [where the big players are highly established] but it is the services around the financial services sector," Ingram says, such as Hutchings’s APIR; InfraRisk, which provides risk-management software to the banks; and share registry provider Computershare.

“One of the other things we find here with some of our success stories is that it is very hard to sustain them because it is so competitive and Chinese buyers will shift the minute the price changes", such as the Australian fruit and vegetable market, which had been quite large but was hit hard by the increase of the Australian dollar, Ingram says.

The Hong Kong government director-general of investment promotion, Simon Galpin, says the biggest growth market last year was Australian businesses, particularly micro-sized companies such as traffic equipment group Bartco, Boral Plasterboard Australia and recruitment company LRS Group.

While many believe you have to be a big player to make it in Hong Kong, Galpin says the opposite is true – as tax and regulation is so minimal, start-up costs can be low.

“It takes less than a day to register a company and you only need one director, who does not need to be a resident of Hong Kong," Galpin says.

Ingram says the trade commission has a mission coming from the Australian Biotechnology Association in May, for which it will arrange meetings with investors.

And a new $US3 billion development is being built in Hong Kong in the Kowloon district, which will be the equivalent of five Sydney Opera Houses. Ingram says it will make Hong Kong the “Paris of Asia" and is being run by Australian Michael Lynch. Ingram hopes the project will create big opportunities for Australian construction, design and related service providers.

“Australians are actually good when the competition is fair and Hong Kong is. [Michael] Lynch says that this is the first time he has ever done a project where the money was sitting in the bank before he started!"

For those willing to take the risk, the pot of gold at the end of the journey could be enormous but for many the dream of tapping China will simply remain fool’s gold.